>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology." with emily chang.

emily: i'm emily chang in san francisco and this is bloomberg technology. two trading players could be looking to tie the knot with the markets in freefall. ftx is exploring an acquisition of robinhood. robinhood is down some 75% since it was public last year. we will tell you where the talks stand. we will bring you our exclusive with the coinflex ceo about why they froze withdrawals. tech companies may be willing to cover travel fees for employees looking to get an abortion, but what about protecting your data? we will talk to a civil rights attorney up about the power tech companies have over your digital rights in a post-roe era. theranos -- his fate in the hands of the jury.

his girlfriend elizabeth holmes was found guilty of defrauding investors. first, we want to get a look at the markets and volatility is back, after the best week for stocks since stocks falling march again to start this week with the tech sector a big drag. bloomberg's ed ludlow is here with the latest. ed: it's not uncommon to see i'm the last few days of the quarter volatility creep back in as portfolio managers adjust the composition. the tech sector certainly the underperformer. the nasdaq is down 8/10 of 1% on monday right after a 7.5% gain last week, it's second-best of the year. yields are such a big part of the story. the u.s. treasury 10-year yield up seven basis points. when we saw the gain and equity markets last week, yields were coming down from around 3.5% on the 10 year back towards 3%. that is quite interesting. i'm going to bring you a silver

lining. i always do this because you are my friend and i want optimism around this place. we saw that gain last week, but valuations have come down, they petrie that boost from the pandemic. looking at names like meditech, the parent company of facebook, the value buyers have started to come back in. that is important, we are asking ourselves where the bottom for this market is. we have also got movers back in the studio. tech companies on the move in both directions. you look at u.s.-listed shares of chinese technologies, jd.com one of the beneficiaries after an investor sold a stake in the company which had been seen as an overhang. a report that amazon is considering two prime days this year. not one, but two and that stuck one of the biggest drags on indices down to 20%. then the big story of the day, stx is talking internally about

its options over whether it can buy robinhood. that stock was halted due to volatility, ultimately gaining 14%. its biggest jump in six months. emily: we will talk to you more about that scoop up ftx acquiring an interest in robinhood. we learned just last month they at bagman-freda owns a 7.6% stake in robinhood through another holding company. he tweeted customer assets should always be primary. everything else is secondary. for more i am joined by a bloomberg reporter who covers robinhood. what is the status of this? reporter: the status is ftx has talked internally about potentially buying robinhood. robinhood has been pretty distressed in the months since its ipo.

it has led a lot of people to wonder if robinhood might pursue a deal. they haven't advanced as far as formal m&a talks but this is something stx is exploring after this date that sam bank between froedtert, as you -- sam bankman-fried took, as you mentioned. emily: they are saying they are excited about robinhood, potential ways we could partner, no active m&a conversations. do we know how robinhood founders feel about this? >> the company declined to comment for our story. it is true that this is in the earlier stages right now. it's complicated by the fact that robinhood cofounders have a supermajority voting, they control over 50% of voting power. that would complicate any deal. however you are still in a

position where there have been a lot of questions about what robinhood might do or whether it might come enough pressure. emily: why would a deal like this make sense? obviously, we know robinhood stock has plummeted. they have to do some layoffs. they are still incredibly popular trading app. you ask a typical retail investor. that said, they are trying to push into the crypto market. that is ftx's bread and butter. talk to us about the reasoning other than the fact that ba nkman-fried is interested. >> he already has a stake in robinhood. but there are other overlaps between the companies. robinhood benefited from the huge boom in retail trading we saw during the pandemic. you can trade equities, options and crypto. ftx is a crypto exchange but has

also shown interest in getting into the equities world as well. there is a fair amount of overlap between the retail heavy world of crypto, and the crypto and stock options trading for the work investors that robinhood represents you can see a tie up of the two making sense. emily: we will continue to stay tuned to your reporting. later in the show, we are joined exclusively by the ceo of the future crypto exchange coinflex. they had to pause all withdrawals. coming up, digital life in a post-roe world. how to navigate what can and cannot be used against you. we will speak with a civil rights attorney about unprecedented territory for big tech next. this is bloomberg. ♪

emily: some of the biggest companies in the world, many in tech have quickly put into action plans to help employees who may need access to abortion care following the supreme court ruling overturning roe v. wade. companies like apple, uber, lyft, meta, amazon and more have announced they will cover travel expenses for employees who live where the measure will be banned. for more, i am joined by sarah. explain to us what is happening in the fine print. >> a lot of the companies are

saying they will include abortion among the healthier procedures they will reimburse travel for. often, it is something you need, they will find a way to fly you to a state where that is possible. the problem is they are not saying anything an up -- about another big question which is about investments and the data they collect. there is concern companies will collected data just through users, searches, messaging and interactions online about whether they are planning abortions. prosecutors in states where abortion is illegal might try to subpoena the companies to get it. so far, we have not seen a lot of company stand up and they will not provide that data were that they will protect user

privacy. it is a tricky situation, because historically, the rule has been whenever there is something illegal or requested by law enforcement they comply. in this case where they have a subject that a lot of employees feel passionate about. i don't know how they are going to react when prosecutors start asking for that data. emily: i know that you and your team are trying to get answers from companies about how they will handle he's bigger questions. what are we hearing so far? sarah: we might see some company standing up and saying we are not going to do that, this user data, we will fight in court over not providing it to the government and endangering someone. whereas other companies will say this is the law and we operate by the law of the land. wherever we are putting our

products, we have to do that. so they will just comply. it can set up a lot of problems for people who use the services. it's very different than 50 years ago. whereas now we have this entire economy around knowing exactly what people intend to do based on their online behavior. i think, in the next few years, we are going to see a lot of questions around what responsibilities companies have to their users versus what responsibilities they have to the law. emily: huge, big questions that have yet to be answered. our editor for tech, thank you, sarah. while tech companies might be offering employees navigating a new abortion landscape there are , concerns about the information these companies have on their users and how it could be used

against them if they try to access an abortion. digital rights experts warned that search history, location data and app usage can all be fair game. for more, i'm joined by cynthia conte cook, a fellow at the gender racial and ethnic justice team. we're in some uncharted territory. walk us through this post-roe era and the heightened risk of surveillance. >> you. yes. we are not going back in time, we are going fast forward into uncertainty. what we have already seen happen with digital evidence used against people who were pregnant and were charged with conduct related to the termination of their pregnancy was that the information was text messages, email receipts, searches. and websites visited. that has already been used in

cases we have already examined. emily: how do you expect companies to handle this information? i wonder is there going to be some sort of shadow economy created as a result? cynthia: absolutely. people will be pushed into shadow economies and places where they are experiencing more vulnerability as a result of this decision. emily: what is the power tech companies have here to do something about it? to take a stand, one way or another. cynthia: tech companies could engage in a few different ways. they can collect less data. i have heard a few companies speak to location data recently, but location data has not been used in criminal court against

pregnant people. however their search histories and websites being tracked have. the other things tech companies can do is become prepared to go into court and actually push back against requests from law enforcement to share information about what websites people are looking at and what information they are searching for. emily: you're talking about the biggest and most powerful companies in the world. senators wrote a letter to the ftc asking them to investigate apple and google's role in all of this. what responsibility do you think these companies have? cynthia: the companies provide a very important service that allows people to access information about health care. this is a public health issue much more than it is a technology issue. the technology companies need to understand that the information they collect and store, and law enforcement agencies they provide it to will use it to criminalize people they are

relying on to be their users and people who will purchase information and commit to advertisers. it is part of the ecosystem. if they are disregarding the rights and welfare of the people that they are serving through the technology they provide, those people will be less stable -- less able to participate. emily: there are big companies, but there is also a host of startups offering women and family health care, i wonder what you think the role is of those companies, less powerful, obviously less well resourced, being put in a very difficult situation where in 24 or 25 states this is just fine and in the rest of the country it is not. cynthia: for smaller startups, i would say they should find out

from places that are already existing and have been serving the abortion access movement what the needs are for the questions they are asking and for the types of services they are considering making available , first, the people involved in using it should be designing it. emily: what do you think about the role of these quote-on vote -- unquote crisis pregnancy firms? these firms are encouraging people not to get abortion and are scooping up data on women who are seeking abortion. cynthia: that is right, they are. the crisis pregnancy centers have been deliberately not just through interviews collecting information about people, but through their website collecting information about people that visit their websites in the same way. emily: what is your advice to women right now about protecting their digital autonomy in this

kind of messy middle where we are, where a lot of this has yet to be decided, and this law was just overturned? cynthia: in the same way we we should not all be individually responsible for protecting ourselves against covid, we should not be individually responsible for securing all of our digital devices and having all the knowledge of what types of information is collected about us, but there are a few things that people can do. secure your devices. do not share your devices voluntarily with police officers, social workers, anyone at a hospital. secure your communications. make sure you are using encrypted communication, even very casually, and you have all your contacts already imported. secure your browsing. use as your default the types of browsers that are not going to track you as you visit website to website. emily: fascinating new landscape to explore.

ford foundation fellow, civil rights attorney. thank you. a new poll suggests a majority of americans disapprove of the u.s. supreme court decision to overturn the constitutional "right" to an abortion. 69% oppose the ruling including 78% of republicans support the action, 83% of democrats disapprove. coming up, the boyfriend of theranos founder elizabeth holmes will he face the same , fate? a jury is deliberating his future right now. we will have the latest on the case, next. this is bloomberg. ♪

emily: a jury is deliberating in the trial of the former second-in-command at theranos and ex-boyfriend of elizabeth holmes. his lawyers have done their best to try and separate him from holmes, who is found guilty of defrauding investors in january. i am joined by our reporter who covered the trial for us. you have been there for much of the trial of sunny balwani, have lawyers been successful separating the two? reporter: we are going to find out. i am not sure. it is going to be interesting to see what jurors think. elizabeth holmes has loomed large over this trial. i was in closing arguments last week. and on one day alone, in his

lawyers closing arguments, she was mentioned 96 times. what sunny's lawyers are trying to do is say that he too was defrauded by elizabeth holmes. that she tricked him, too. that is what they are trying to pull off. i think that's going to be unsuccessful. emily: the jury was instructed to separate the two. and so, you wonder if it's actually going to work. joel: that is the real conundrum of this trial and confusing for jurors because they got an instruction, i don't know if you are able to show that. they asked jurors to not consider any fact or aspect of elizabeth holmes' trial. that is read legally, technically, you are not supposed to consider the trial. that is the instruction. but she has permeated this entire affair and be -- the

trial. she has been mentioned so many times that it is impossible to separate the two out. that is part of the reason he is in so much trouble. emily: what is your perception after spending so much time in the courtroom? is it clear that one had more of a role than another? or were they working in tandem? joel: his lawyers have said he joined much later. she founded the company and he joined years later. that is away his lawyers have tried to say this is her company and he just got duped. we have seen the same texts and emails that were shown at elizabeth holmes' trial, showing how tight they were. he was the president, she was ceo. even in those titles, they held a special place in the company,

special walls. they held on to information only they could see or decided who can see what. they were in tandem. that is what jurors are going to see. emily: does he face the same potential sentence? joel: he does, part of the reason she has not been sentenced yet is because the judge wants to figure out his role in relationship to hers. they look to be so closely aligned that i think they are both facing between eight and 10 years in prison. emily: interesting. elizabeth holmes, the deliberations much longer than any of us expected. do you think that's going to happen? joel: this trial is very different. it's been much quieter. you don't have the media. emily: people showing up at 2:00 i am dressed as holmes? jewel: the courtroom is quiet and empty. his family is sitting behind,

just packed together. even though there is space in the courtroom. what they are seeing is a different trial. there is the same facts, but there is not this kind of energy or pressure that i know speaking to jurors after the homes -- holmes trial that they felt to make a decision. here they could decide easier and without pressure. emily: we will be following. we will have you back when there is one. coming up tech companies and , startups are laying off people en masse, creating tough questions about whether to buy equity. we will discuss that and more, next. ♪

this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.

>> this is a moment that feels that it has been 12 years in the making. >> if you look at today's technology companies, the large majority will survive it.

the question is, do they have a strategy to thrive afterwards? >> the best time to start a country dutch company is when you're in a recession. >> it is clear right now the market is going to reward companies to build real earnings. >> now we are going into a world where we will have to be more -- >> the place of opportunity today we are focused on continues to be cybersecurity. >> i would say that big sectors that are essential businesses, essential markets, perhaps travel. >> also i think the future of work continues to be a place of great opportunity. >> a lot of companies will be absorbed and other companies will just disappear. but in the end, typically a situation like this creates new growth. >> there are bright spots, but no question we are in for choppy times. emily: welcome back to bloomberg

technology. i'm emily chang in san francisco. our guests on the show about the market downturn and what they think the future could be. private capital startups raised far few funding than they did late last year. our own ed ludlow here to break it down. ed: deal activity across all sources of startups is down, but we also heard from venture capitalists and ceo's that there is caution overall between the first quarter into the second quarter up to june 23. the insider data shows that the deal count was down 23%. you can see the aggregate line , the orange line, has dropped. it is down and that coincided with the volatility we thousand -- volatility we saw in public equity markets. the chart does not show is that it is just the bc's are writing fewer checks, but they are also writing smaller checks. that is where the breakdown

becomes a bit more different. smaller checks overall down by 20% in terms of the size of the dollar value that is funding startups. if you look, for example, at late stage startups where there was less of a drop in the number of deals, the drop in the size of the deal was much more noticeable. 41% drop from q1 through q2. to start off, going through a series of these rounds and above. it is interesting. we don't talk as much about private markets when there is volatility in the public markets, but the consensus seems very much aligned that there is caution out there but also opportunity for names that could withstand whatever is going to come next. emily: thank you. i want to stick in with this now and bring in phil haslett. he is the founder and chief strategy officer for equityzen. where do you think we are in this cycle of downturn?

phil: we have continued the trend since we last spoke in march, which is that private valuations tend to lag behind public funds, and we're seeing that reality come through for q2. something we have seen on our side is that if companies were trading on equities that had a 20% to 30% discount in q1, we are seeing that continue to go downwards to may be that 40% to 60% drop. that reflects what we see in the public markets. we may be reaching the bottom but we're certainly continuing the slide. emily: some venture capitalists are recommending three to four four years of runway. can startups handle that when their businesses are already getting a hit? phil: it is easy for a bunch of venture capitalists to say. no company was prepared to have three to four years of cash as a startup, the same way that a company in the public startup

was not prepared to have zero revenue for a time. that is unrealistic. what you will see is a shift in how companies are spending money in particular. one of the things they can control has been observed by some significant headcount reductions. we have seen that compensation is the majority for most of these companies who expect these to continue. emily: talk to us about folks that are getting laid off. a lot of people don't understand that employees who work at startups, half the upside is the equity in those startups, but you have to buy that equity to benefit from that upside often before you know if the startup is going to be a success or not. so when you get laid off from a company, you have a short window oftentimes in order to buy that equity. can you explain to us what these laid-off employees are going through right now? phil: absolutely. it is a tough time. it starts off with getting laid off, and is a big hit to someone's financial future.

it is compounded by the fact that most employees are issued stock options, which give them the right to purchase shares for the company they work for, and that is usually a big incentive for these employees to join the company. unfortunately, most of the rules around these state that you have after you have left the company or return them, so you can imagine the unfortunate scenario where hundreds or thousands of employees are getting laid off and given a short window to decide if they should pay money out of pocket and incur a tax bill to own their stock or not. it is really uncertain to know if your company is going to be successful at this point, whereas nine or 12 months ago, it was a no-brainer. we are seeing more active conversations between companies and secondary companies like equityzen. and also between companies and

their employees to see if they can help solve this problem, which is a meaningful one. emily: then you have a company like bolt, the highflying e-commerce startup that gave the employees the option to buy their shares early. i wonder if those employees are now in a precarious financial situation because they took that bet, and now it is not panning out. at least not now. phil: they absolutely are and when that proposal came out from financials five months ago, a lot of venture capitalists, ones that had gone through the dot-com crash in the 2000's, they say that this could end poorly when the markets turn on their head. while it is one idea to help employees with stock, we can think of other solutions that are more palatable for companies to enact with their employees. i would say the two easiest ones to do are that companies can proactively convert the equity competition to give to employees as a departure to extend the amount of time they have to

exercise to own their shares. that is something we saw from pinterest and coinbase many years ago while they were private. it was well received. something we work on with companies is we can help companies allow employees to sell some of their shares through secondary transactions to help cover the cost of any exercise or any tax implications. the last one i think that we will see and that we talked about before is that companies can redo their fair market valuations, what is used to determine tax implications and the price at which you get your stock options. we saw companies like instacart do that and i hope to see more companies do that as well. emily: what is your advice to employees right now? say they have just gotten laid off and they do not know what to do. should they buy the stock or not? how do they evaluate this decision? phil: my first advice would be to ask the company what choices they do have with their equities. is it really just 90 days? the second thing i would ask is

if the company is aware of investors that are looking for growing their position that could help with liquidity. and the last one, which is self-serving, is to explore what options you have within secondary markets to get liquidity for your shares. while the markets have taken a turn, we have seen a lot of investor interest in these lower prices for companies they have wanted to invest in four years -- for years that they feel like are more fairly valued. i encourage having these conversations as soon as possible. emily: interesting. phil haslett, founder and chief strategy officer at equityzen. what's to consider and i appreciate you taking the time to walk us through all of that. coming up, the futures equity exchange that just halted all withdrawals. we speak to coin flex's ceo mark lamb exclusively about how quick coinflex can fix it. that is next. this is bloomberg. ♪

emily: it is time now for our crypto report and i want to take a look at the crypto liquidity as a wave of liquidations gives rise to even more fear. celsius started freezing withdrawals earlier this month and a vague tweet by the founder of the crypto hedge fund, three arrows capital, is facing even

more troubles. that created even more anxiety. now coinflex has the crypto's physical crypto exchanges in question. sonali basak is here now to give us a lay of the land. sonali: than addition to the situations that you talked about, when it comes to coinflex , we are going to get some more details about them in a second, but equally as interesting is how the industry is being shored up in the middle of this crypto winter and the liquidity crunch. we are going to talk about how that is going to happen with mark lamb, the ceo of coinflex. coinflex is looking to bring back their operations in a more normal form and resuming withdrawals by thursday, june 30. one of the ways that you have said to me today that you are planning on doing that is by issuing a new token. that is almost $50 million, $47 million worth with a 20% yield.

that is a large return to investors who would get into this token. mark, tell me, what does this token represent? who is it making whole, how is it making them whole, and what happens if you cannot raise that money? mark: at coinflex, fundamentally we believe in markets, transparency, and tokenization. so we have done that with one of our other products. it is funding a market and it is a token. we are doing that here with the recovery value usd. so that is rvusd. it is a way for us to use tokenization to solve this problem, where we have this asset which is a high net worth individual, they owe us these funds. we do believe that they are going to get us these funds at some point in the future, and we wanted to make it such that the assets all match and everything

matches up in a way that is market-based and we pass on this risk to investors that understand what the risk is and are eager for this risk and basically solve the problem. right now we cannot have withdrawals. there are lots of different ways of solving these problems in crypto finance and crypto generally is on the cutting-edge of finance. one of the ways that hasn't been as successful in the past is when companies put their head in the sand or refuse to communicate or hide behind the excuse of lawyers, rather than treating lawyers as advisors in creating solutions that resolve a problem extremely quickly. and also in a way where more people get to participate in the solution. sonali: with solving this

problem, are you worried you will face a run on the bank in that scenario? mark: where not worried about that scenario because upon this fundraiser being concluded, everyone can withdraw. we want everything to be matched at all times and situations where that isn't, we have to intervene and do these things. going forward, we are going to take even further steps on making every aspect of the exchange transparent, including the futures positions, the notional value of every account 's positions public, find an external auditing firm, and also the margin backing those positions. we think that ultimately, that in -- is in line with our ethos from day one. we have wanted everything to be market-based, transparent, and tokenized. emily: what is your longer-term plan to make sure if we experienced this kind of volatility in the market again, certainly the crypto market will

experience this volatility again, it is a volatile market, that this will not happen or that this will not come down to or depend on one individual? mark: part of the issue -- and this is common practice in crypto and it originates from traditional finance -- but we had a customer on a personal recourse based non-liquidation account. we will be eliminating that type of account. we will also be making these positions public and you won't just have to take our word for it. we have an auditing firm we will be working with to have them publish this data and this is much needed data in the future. there is not a single crypto futures exchange in the world, including in the u.s., that makes this data public around position sizes and the margin ratios, margin balances, and collateral backing those positions. it is one of those things where there is a balance between transparency and privacy. in d5, they have set the

standard in terms of transparency and we need to do at least as good as, if not much better than, d5 with respect to transparency so that depositors and users feel comfortable trading. it has a damage to privacy, but we think that traders will find that worthwhile for the additional comfort they get from knowing the risk and the leverage implicit in the system. emily: so what is your message to customers right now? what is your level of confidence that in the three days between now and june 30, you're going to make that date? mark: i am highly confident -- we have spoken to people nonstop on phone calls and in person meetings since this issue arose. and we have more than half of the amount needed in soft commitments to get this done. and so i am highly confident

that there is strong appetite from within the crypto space and also in the broader institutional space in this type of token. we are turning a problem into an turning that into an opportunity that gets resolution very quickly. this is something where at the end of this offering, the problem is solved within a matter of days. this is something that has been done before in crypto's history and it has been extremely successful. it has been done for in crypto. sonali: what kind of pressure do you feel to reveal more details about who this investor is who couldn't meet margin calls initially, especially when this new token is tied to their fortunes? the people who will be investing in this new token are doing it to make this other investor they don't know hold. mark: that is a great question.

the market is always going to demand more transparency. we are going to be revealing as much information as we can. as we are able to reveal that information. at this point, this is what we can give. and we wanted to quickly be fully transparent about what happened, how we are resolving it, and our plan going forward to protect customers and be fully transparent to customers about all of the leverage in the system and how it is collateralized. but i think the market will demand that information and the market will try to pursue that information. that is the beautiful thing about markets and that is the important thing about transparency. i think that is what is going to happen going forward. sonali: this one customer, how do you know about whether he or she can pay you back? how much confidence do you have that you will get that money

back, and what confidence do you have for customers that he will remain solvent and you will continue operations in normal form if they cannot pay you back? mark: we have internal mechanisms if we are not able to conclude this raise. we have internal mechanisms on the table that we are looking at. the focus is on this mechanism because it opens up a new type of asset for customers to invest in. there are a lot of people familiar with the situation, a lot of people who want access to this type of yield. again, we want to turn this into an opportunity for people and we want to be totally transparent about what happened. we also want to make it clear going forward that every bit of data about the inner workings of our exchange is going to be public. we are extremely public about all of the data in our exchange,

but this is an area for us to go even further and even more cutting-edge on the transparency note. emily: all right. mark lamb, ceo of coinflex, thank you for coming and sharing your insight into what is happening, along with our very own sonali basak. appreciate it. coming up, the crypto meltdown not sparing anyone. the next is the tether stablecoin. i will tell you why and how after the break. this is bloomberg. ♪

emily: short-sellers reportedly have been ramping up their bets against tether, the world's largest stablecoin. according to the wall street journal, more traditional hedge funds have done trades to shore tether through the trading.

some hedge funds are shorting tether as they bet about the broader economy. and taiwan's global wafers plan to build a semiconductor wafer plant in texas. that will be the biggest of its kind on american soil. the plan is being built in sherman, texas. it could support as many as 1500 jobs. that does it for this edition of "bloomberg technology." we will be back tomorrow. we have many great guests coming up. arms ceo would be here along with matthew prince, and this will be front -- fun. american sprinter and the most decorated u.s. track and field athlete in olympic history, allison phoenix, she has a tech angle for you. we will have that for you tomorrow. i am emily chang in san francisco. this is bloomberg. ♪

- [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) vo: when times get dark, we can't see the help that's all around us.

let 2-1-1 be your guiding light. for help with food, health care, and other resources. operator: 2-1-1, how can i help you? vo: call 211 or visit 211.org 2-1-1 get connected. get help.

manus: this